Putin says Russia should scrap profit tax on repatriated funds

MOSCOW (Reuters) - Russia should scrap the 13 percent profit tax on funds repatriated from abroad and renew an amnesty from penalties for businesses returning capital, as Washington moves toward tougher sanctions, President Vladimir Putin said on Monday.

Amid huge capital outflows in 2014, deteriorating relations with the West over the Ukraine conflict and weak oil prices, Moscow offered the amnesty for those returning capital to Russia.

The amnesty, which expired in mid-2016, scrapped responsibility for past taxes and currency violations for those who declared assets abroad. But few agreed to take part in the amnesty.

Russian Finance Minister Anton Siluanov said on Friday that his ministry was proposing such an amnesty be restored in 2018 for at least a year.

Speaking at the meeting with the leadership of the Russian parliament, Putin said he had two proposals which he had not previously spoken about publicly.

“The first is to extend the amnesty timeline, I mean external restrictions are not easing, but, on the contrary, tending to rise,” he said.

U.S. President Donald Trump signed into law a new package of sanctions in August. One provision asked the U.S. Treasury Secretary to submit a report on the impact of expanding sanctions to cover Russian sovereign debt, with an outcome expected as early as February.

Putin’s second proposal was to scrap 13 percent taxes for transfers of capital to Russia by businesses.

Among other tools to encourage the return of money will be a special bonds program.

Russia plans to adjust the terms of a sovereign Eurobond issue next year so that businesses can use the bonds to repatriate funds in a way that would protect them from being damaged by new sanctions on Moscow.

Reuters reported earlier this month that wealthy Russians facing the prospect of targeted U.S. sanctions next year had floated the idea of a special treasury bond to help create favorable conditions for them to bring their cash home.